Two renowned international rating agencies _ S&P and Fitch have announced Ukraine’s default and lowered Ukraine’s foreign currency ratings to selective default and restricted default.
A few days ago, Ukraine’s overseas creditors endorsed the country’s request for a two-year freeze on payments on almost $20 billion in international bonds. The decision will save Ukraine some immediate payments of $6bn, Ukrainian Prime Minister Denys Shmyhal said.
S&P lowered Ukraine’s foreign currency rating to “SD/SD” from “CC/C”.
“Given the announced terms and conditions of the restructuring, and in line with our criteria, we view the transaction as distressed and tantamount to default,” S&P said.
Fitch rating agency cut Ukraine’s long-term foreign currency rating to “RD” from “C”, as it deems the deferral of debt payments as a completion of a distressed debt exchange.
Meanwhile, S&P also said the macroeconomic and fiscal stress stemming from Russia’s invasion of Ukraine may weaken the Ukrainian government’s ability to stay current on its local currency debt and lowered the Eastern European country’s local currency rating to “CCC-plus/C” from “B-minus/B”.
Battered by Russia’s invasion, which started on Feb 24, Ukraine faces a 35-45 per cent economic contraction in 2022 and a monthly fiscal shortfall of $5bn.
